Small to medium-size businesses (SMBs) face tough decisions from the start. In the early stages you have big ideas, but limited capital. Any capital you do have must be invested in an operational foundation that will build the business. Back office solutions such as Enterprise Resource Planning (ERP) may seem like a luxury you simply can’t afford. You start out running the business by the seat of your pants. Manual processes and spreadsheets are common. Decision-making is driven more by gut feel rather than data and hard facts. And that works…for a little while. But then you have a bit of success and you start to find yourself stumbling a bit.
You start off thinking, “We just need…” At first, your list might be quite small. The sales team can’t live without a tool to manage contacts, opportunities, and pipeline, so you find some inexpensive (or even free!) software. Accounting needs to balance the books and turns to a small accounting package. Operations need some basic inventory control. Another inexpensive or free piece of software fills that gap. And you’re still managing orders in spreadsheets. None of these talk to each other, and before you know it, your “back office solution” is held together with the equivalent of strings and duct tape.
While spreadsheets, manual processes or desktop solutions might suffice in very early stages of start-ups, they quickly become inhibitors rather than enablers of growth. These solutions that were intended to solve problems and save time are now costing you in terms of efficiency, productivity and may even be limiting you in terms of scaling your business. In other words, they are holding you back.
What are some of the tell-tale signs you do indeed need an integrated solution?
- You’re not in control: Processes are manual; data is scattered in file cabinets, offline spreadsheets and across desktops. That data is transferred between desks four or five or even six or eight times, adding little value and introducing the risk of errors.
- You spend more time searching for data than you can really afford: You’re operating blind, not knowing where or when a crisis might develop. You need data at your fingertips and you need better time management.
- You’ve no idea how and where to expand: Your business is growing. You want to continue to add new geographies and new market segments. But you have no visibility as to where you made your best profit.
- You can’t meet customer demand: Your inventory levels are rising, yet you still can’t seem to meet customer requested ship dates. How do you better forecast demand, lean out your inventory, and produce a product just in time?
- Your office manager also manages your payroll and administers benefits: The same person who orders your office supplies is the person your employees turn to when they have a question or issue with their benefits. And this person also runs your payroll. Is that person expert and up-to-date on the latest payroll regulations? Does this involve spreadsheets? Are they 100% error-free? Do you have a backup if this person is ill, injured or takes an extended leave of absence?
- You have no IT staff: The closest you have to an Information Technology (IT) staff is that bright kid you hired to manage your internal network, your laptops and phones. Technology is leaving you behind but you’re growing and would rather invest in revenue-generating activities, not overhead.
- Cash is tight: Whether you need to finance your supply chain costs or invest in growth, credit is still tight. You are handicapped in maintaining a close eye on cash and liquidity.
Many believe ERP is only for the “big guys.” They can’t possibly afford it. But the reality is that you need most, if not all the key components required by large enterprises, and yet you don’t have the deep pockets to stitch different pieces of the puzzle together to make it a solid solution. There are complex and expensive solutions on the market, but there are also very affordable alternatives that provide a complete and integrated solution.
If you are a small or midsize company that is growing, there is a very good chance you might be strapped for cash. However, that is no longer a valid reason for postponing your ERP journey. Many solutions today are available as Software as a Service (SaaS). Not only is there no capital outlay for hardware and upfront software licenses, but this deployment option also allows you to account for the investment as operating expense versus a capital expense.
Deciding to purchase a new ERP is a big decision. If you are thinking your situation is not that bad, do you think it will be any easier to fix the problem when things get worse? Or when your business is larger and more complex? Selecting and implementing a new system that runs your business, when your business is under distress, is the least optimal timing. If you are a small business operating without a technology-enabled modern ERP solution, ask yourself the tough questions like:
- Are you in control?
- Are you focused entirely on running your business? Or do you spend more time searching for and collecting data than analysing it and making decisions?
- Are all the departments in your organisation supported? Is your current solution complete?
- Are you managing against realistic and achievable goals?
- Are you saving money?
There are dozens more you could ask. Depending on how you answered the questions above, instead of asking if you can afford ERP, the better question to ask is, “Can you afford not to invest?”
The cost of fully integrated ERP solutions has come down, while at the same time both ease of use, as well as feature functionality, have improved significantly. A well-executed ERP implementation can enable change and provide on-going savings that can help you sustain and grow your business.
Untangle Your Business System Hairball
Many businesses start off by investing in a financials/accounting solution to run their back office and then add a separate CRM, ecommerce, HRIS or any other point solution as they grow. While these disparate systems may get the job done, having a single version of the truth could prove challenging when reporting or auditing.